How to Spot Risk Early

Market volatility often first appears halfway around the globe—here's how to use it as an early warning signal or even as a profitable ETF trade.

Recently there have been some rumblings about how the CBOE Volatility Index (VIX) may not be accurately reflecting the risk and uncertainty in the financial markets. This type of claim usually surfaces when the VIX dips in the low teens while investors grapple with complex threats to the market. Right now, the market is evaluating the euro-zone crisis, the transition of the Chinese economy from an export emphasis to one where domestic consumption plays a greater role, the Abenomics experiment, and the path of future Federal...